What New Dentists Should Do Now to Retire Later

By Dr Jesse Green

On 09 Jul 2018

We are undergoing a lot of turbulence. There’s a lot of upheaval in the dental profession and healthcare overall. It’s being consolidated. There’s lots of big money that has found medicine and dentistry. They can source capital and just come on like gangbusters and consolidate practices, add marketing, expand hours, and then hire young dentists that are laden with debt and need a good job.

Just like with life, there are different stages of a career. Young dentists today are finishing university and facing what seems like insurmountable odds. There is so much time, effort, and cost already invested in the career that it’s not possible to turn back. Young dentists must move forward into an uncertain future.

Hopefully, at the end of a long career, dentists will be able to enjoy the fruits of their labour. However, it takes smart positioning to ensure that you will have the cash flow to enjoy the 20 or 30 years after retirement. How do you go about doing that?

The good news for young dentists is that, even if they have debt, they have time on their side.

Set the goalposts.

When you’re saving for retirement, how do you know when you have enough? What is ‘enough’? It’s important to know where to set the goalposts, so you know where to aim.

It starts with lifestyle. A lifestyle burn rate encompasses the expenses of your way of living. Things like where you choose to live and how many children you wish to have will impact your lifestyle burn rate and your cost for the future.

Leverage compound interest.

When you’re just starting out as a dentist, you won’t necessarily have the resources or experience of someone who has had a practice for decades. Dentists just graduating have more debt than ever before while the cost of entering their practice is higher than it’s ever been.

What young dentists have is time. Now is the time to make moves that will position you so you can retire well. Leveraging compound interest is one way to do this. A small investment now will have a much larger return with 30 years of compound interest than 10.

But know it’s not just about accumulation.

For many, the advice about retirement goes as far as saving. Financial advisors sell financial products like stocks, bonds, and annuities as a solution for retirement. The accumulation theory says go to work, build your practice, take your discretionary income left after taxes and bills and put it away. There’s nothing wrong with this plan, but the problem is, how do you know that it’ll be enough?

It’s important not only to accumulate capital but to turn that capital into cash flow. Actual sustainable cash flow removes the question marks from retirement. If you have passive income coming in during your retirement, there is no need to worry about “running out”.

Invest in something you can touch.

Stocks and bonds are just pieces of paper at the end of the day. The only value they have is the value we imbue in them. Consider investing in tangible assets whether that’s real estate or a dentistry practice. These types of investments have inherent value. A house is a shelter and safety. It’s a real thing you can reach out and touch.

Of course, real estate isn’t a sure thing, as no investment is. We’ve seen the housing crisis in the U.S. and how that affected families across the country, but you can also turn real estate into sustainable, predictable, inflation-hedged cash flow that will last through retirement. The great thing about these kinds of investments is that you can do them early in your career and they will continue to add value.

Find mentors to help you excel in the business world.

Younger dentists are making different decisions than their parents did. Not everyone coming out of university today feels like they necessarily have to own a practice. That’s a valid decision – and not a bad one. But there are those who have always wanted to be their boss.

It’s tougher when you have debt. It’s important to not only be a good dentist but a good businessperson. The road is mentorship.

Get the degree that you need to so you can get out into the world and start learning with boots on the ground. There’s no need to get an MBA. You just need to find the best person who is running the kind of business you want. Don’t work for free, but if you can work under the wings of someone who knows what they’re doing, consider working for less than you could make in corporate practice. Trading your time and labour for real-time, on-the-job training so you can go out and open your practice will repay itself easily.

ALB – Always Be Learning

Young dentists should also spend their time to sharpen their clinical skills. For example, if you’re interested in pursuing a boutique practice that offers a holistic experience for discerning wealthy patients, then you will want to ensure that your cosmetic and clinical implant skills are top notch. Start early and chip away at the skills you need to succeed.

Final words…

The world is changing. It’s not the same world that I grew up in and for young dentists, there can be a lot of big barriers in the way to success. But know that for young dentists, retirement is a long game. Be prudent about how you left lifestyle to build your credit. Be careful about adding more debt. With thoughtfulness now, you can retire comfortably when the time comes.

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